Delta And LATAM Joint Venture Approved In Chile

Yesterday, Chile’s Tribunal for the Defense of Free Competition (TDLC) approved the out-of-court agreement reached by LATAM Airlines Group, Delta Air Lines, and the Chilean National Economic Prosecutor’s Office. The agreement and approval are a step closer towards LATAM and Delta’s Joint Venture Agreement.

Delta and LATAM received Chile’s approval for their Joint Venture Agreement. Photo: Vincenzo Pace | Simple Flying

A step closer

On May 7, 2020, LATAM and Delta announced they had signed a trans-American Joint Venture Agreement.

So far, LATAM and Delta have obtained approvals from four different regulatory and competition entities in South America. Brazil was the first country to give its final approval on February 24, 2021, followed by Uruguay. Then, Colombia did the same on May 11, and now Chile.

In a statement, LATAM Airlines Group said,

“The decision of Chile’s Tribunal for the Defense of Free Competition that approves the extrajudicial agreement between LATAM Airlines Group, Delta and the National Economic Prosecutor’s Office is one more step toward the two airlines achieving the implementation of their Joint Venture Agreement.”

The regulatory approval process for antitrust immunity with the US Department of Transportation continues said LATAM.

Once all regulatory approvals are complete, “the partnership between the airlines will connect the Americas to the world like never before.”

LATAM announced its partnership with Delta in 2019. Photo: Vincenzo Pace | Simple Flying

The impact of the JVA

On September 26, 2019, Delta and LATAM announced a partnership. LATAM broke its relationship with oneworld and American Airlines in a piece of seismic news across the Latin American region.

Enrique Cueto, who was LATAM’s CEO at the time, said,

“This alliance with Delta strengthens our company and enhances our leadership in Latin America by providing the best connectivity through our highly complementary route networks.”

A few months after, both carriers signed a trans-American Joint Venture Agreement. For Delta, it was the second JVA it had with a Latin American carrier (Aeromexico came first in 2017).

Despite the COVID-19 crisis (and LATAM’s Chapter 11), Delta believed the joint venture was the way forward. Both companies saw the JVA as the airline alliance of the future. Moreover, Delta believes the Joint Venture is the only way to counterbalance American Airlines’ presence in Latin America.

In 2021, Delta is strengthening its presence in the Americas. The airline is purchasing US$185 million of Aeromexico’s Chapter 11 debt. Moreover, Aeromexico and LATAM are looking to increase their collaboration as part of their Chapter 11 reorganization plans, which would only improve the Delta-Aeromexico-LATAM axis in the region.

American Airlines had a Joint Venture with LATAM between 2016 and 2019. Photo: Vincenzo Pace | Simple Flying

Once upon a time, there was American

Before LATAM and Delta’s Joint Venture Agreement, the South American carrier had a similar alliance with American Airlines. LATAM and American even tried to create their own joint venture.

Nevertheless, LATAM and American hit a wall in Chile. The Chilean Supreme Court barred the joint venture from operating flights to Chile due to antitrust concerns in 2019.

A few months after the rejection, Delta announced a US$1.9 billion investment for a 20% stake in LATAM. Not shortly after, LATAM and American’s alliance fell.

Since then, American Airlines have found new partners. The US carrier has recently announced investments in Brazil’s GOL Linhas Aereas and Chile’s JetSMART.

Do you think the US will approve Delta and LATAM’s Joint Venture Agreement? Let us know your comments below. 

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